Weekly Earnings Look: Upward Revisions to EPS in Q3, ’15, Best All Year

FC-eps estimate revisions

The above spreadsheet tracks “upward / downward” revisions to the Russell 3000 every week of the year. The blocks on the spreadsheet are the bulk of the SP 500 earnings reporting season, from which the analyst model updates constitute the bulk of the revisions every quarter.

Note how Q3 ’15 earnings saw the best percentage of upward revisions, so far in 2015’s calendar reporting season.

Despite the headlines, I think some of the better revisions could due to the fact that since March ’15, the dollar has remained relatively stable, particularly against the euro, and this “easier compare” should last until the Spring, 2016. In addition, Energy comp’s get easier for the next 6 months.

By the numbers: 

  • The forward 4-quarter estimate per Thomson Reuters fell slightly this week to $123.77 down from $123.86.
  • The P.E ratio on the forward estimate is 17(x)
  • The PEG ratio is still negative. Ex-Energy the PEG is over 2(x), probably closer to 2.5(x)
  • The SP 500 earnings yield is 5.92%
  • The y/y growth of the forward estimate is still -2%. I thought that would be positive by now. In 2014, by this time, crude oil was collapsing.

Conclusion:¬†Although this blog is fundamentally-oriented, the most important market action investors should want to see is the SP 500 breaking out above the May ’15, July ’15 highs of 2,132 – 2,135, to a new all time high.

The SP 500 is up roughly 1% – 2% in 2015, and SP 500 earnings have grown about 0% – 1% based on the bottom-up estimate published by Thomson Reuters.

2014 SP 500 bottom-up estimate: $118.78 (actual)

2015 SP 500 bottom-up estimate: $118.21 (estimate as of 11/20/15, includes Energy)

2016 SP 500 bottom-up estimate: $128.24 (estimate as of 11/20/15)

2014 y/y Growth: 8%

2015 y/y Growth: 0% (est)

2016 y/y Growth: 8% (est)

Like a bad poker player, the SP 500, Nasdaq and major Us equity indices, need to tip their hands shortly and trade to new all-time highs.

My bet is they do, based on the poor sentiment and low expectations.

Per Josh Brown’s blog, via Scott Kimble and Ryan Detrick, the SP 500 has rallied the final 30 days of the year, for 12 years straight. That should take us to an all-time-high.

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